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MORE OF YOUR MONEY FLOWS TO RICH GUY & MOM

The Plain Dealer this morning headlined a major public give-away as a “$54M injection” for the Wolstein Flats project. private development, SUPPOSEDLY.

You call that an injection? I call it a transfusion.

Below I repeat something I wrote when the project was first announced back in 2006. At that time the public money was obscene. Now Mayor Frank Jackson, Gov. Ted Strickland and the feds are simply adding to the loot Wolstein gets. See below for the sad story of a city willing to give, give and give to the guys that take, take and take.

“The city previously allocated nearly $25 million in loans and grants for the Flats,” says the PD. No explanation, as usual. No details, as usual.

“It’s one of the most complicated economic development projects I’ve ever seen,” Warren told the Plain Dealer. Warren, acting more like a used car salesman than an economic development expert also noted that the project “has challenges, but it’s a very strong package.”

What’s so complicated? The city, state and federal money fed money to a developer and he puts up a development that looks like a loser at best.

Here all this public dough is going to Scott Wolstein and his mom, Iris, and what are we getting? Empty office space in the center of downtown. That’s what we get.

In the first phase Ernst & Young’s downtown office will move from one downtown spot to another. Other firms are moving from the Huntington building to the new subsidized project, soaked in public dollars. The loss of tenants damages a historic building at E. 9th and Euclid, already becoming a ghost spot.

Will some Council member at least get into the legislation that for all these public dollars Wolstein will never go to the County Board of Revision for a reduction in the value of his projects? Don’t hold your breath.

This kind of give-away can be announced with no critical analysis by the Pee Dee or anybody else. The mayoral race is over so here’s your payback Cleveland - you get nothing from Frank Jackson.

Wolstein? Wolstein gets whatever he wants.

Read the deal as it stood in 2006. It only got better yesterday.

This was written back in May 2006 when the city opened your pocketbook to the Wolstein group. And here is how it was then before the newest flow of public money for private interests.

What does the money deal look like? As you might expect in desperate Subsidy City, really horrible. An open checkbook to a wealthy developer.

Here’s the line-up of public loot (your money):

- BDOHS (port authority) will provide $11-million in loans.

- City of Cleveland will provide $6-million in Core City loans.

- Cleveland Public Power will provide $3.4 million in services.

- Cleveland Water Division will provide $740,000 in infrastructure costs.

- Cleveland will provide another $1-million from its general obligation bonds.

- The County, City and Cleveland schools will forgo $11,140,000 in property taxes under a TIF (tax abatement) program to help the project.

- Cuyahoga County will provide $1-million in subsidies.

- The State of Ohio will provide a grant of $3-million for “environmental remediation,” matched by a loan from Cuyahoga County of $1-million, both committed from the 2005 Clean Ohio program.

- Tax-exempt infrastructure bonds estimated to be $9 million are secured by annual payments by the Northeast Ohio Regional Sewer District.

- The sum of approximately $4,550,000 will be made available through the Federal Highway Administration.

- The federal government has appropriated and the city shall obtain and make available when required for eligible project costs a grant of $1,464,735 from the U. S. Department of Commerce National Oceanic Atmosphere Administration (NOAA grant).

- All rental and condominium units (some 300 units) will be tax abated at 100 percent for 15 years. No cost estimate given by the city, port authority or county.

- The city agrees to enact legislation as necessary to amend and extend the CRA residential tax abatement program to assure that all residential improvements are eligible for the full 15-year, 100 percent abatement of real estate taxes. No cost given.

- The Regional Transit Authority (RTA) will construct a transit station on the RTA Waterfront Rail Line for the project “…all at no cost or expense” to the developer. No total or estimated cost mentioned.

- The city “shall take all necessary action to vacate all existing streets within the project site to the extent no longer require as public improvements for the project, and any easements which impair or adversely affect the development, construction or occupancy of the project, or which lie within the project site and are no longer required for use as public improvements for the Project.” No cost estimate given.

- The city of Cleveland “shall convey to the developer all the land owned by it (the city) within the residential site not necessary for public improvements by official quit-claim deed…” No cost estimate given.

- Under a section called “public improvements”, it states: “Public improvements necessary to support the Residential project will include but may not be limited to the following….

- Abatement, demolition and environmental remediation (including all necessary earthwork and soil clean-up) of the Project properties as they exist as of the execution date of this Agreement so as to allow for construction of the Residential Project.

- On-site paving and landscaping for all areas from the building lines of the Residential Project to the street curb as well as the public spaces of the Riverfront Park described below.

- A Riverfront Park extending from the southern boundary of the Project along the Cuyahoga River’s edge north to the Norfolk & Southern rail line with an eastern edge defined by a realigned Old River Road and a new street network described below. The Park may include but not be limited to the following elements: a riverfront boardwalk, gather places; pavilions; project signage, retail kiosks; and a marina for transient boater use. The Riverfront Park shall be planned in such a manner so as to receive the proposed extension of the Towpath Trail…

- Utility improvements, replacements and/or upgrades sufficient to provide necessary storm and sanitary sewer, water, electrical, gas and thermal heating and cooling services for the Residential Project and the permanent improvements in the public right of way (e. g. street lighting) and property (e.g. Riverfront Park fixtures and appurtenances) for ongoing and seasonal needs.

- Street improvements, realignments and additions to serve the Residential Project and its associated parking facilities, including all necessary traffic control equipment and signage…

- Bulkhead repair, replacement and improvements sufficient to maintain the long-term integrity of the eastern edge of the Project site bordered by the Cuyahoga River.

- The Public Parking Facilities and Private Parking Facilities estimated to consist of a minimum of 1,600 spaces in total and sufficient to serve the retail and residential uses of the Project by way of four structured facilities and no fewer than two surface lots, including all necessary equipment, landscaping and appurtenances.

- An allocable share of land acquisition costs associated with the square footage occupied by the Public Improvement as a percentage of the entire Project square footage (Residential Project plus Public Improvements.)

- Any and all soft costs which may be attributable to construction of the Public improvements including but not limited to architectural and engineering services, lighting, traffic and parking consultants, permits/fees, testing and inspection, temporary utilities, financing fees and costs and capitalized interest on bonds or loans.

- And the city will wipe the ass of the developer whenever necessary.

Oh, that last one. That was just in my notes not the 57-page agreement.

Do you see why I get upset at the Pee Dee and other news outlets and their tolerance of legalized civic corruption?

The Pee Dee last Friday (in 2006) praised the politicians under, “Progress (there’s that word) on the East Bank, an editorial that concluded by labeling the proposed project “an important cornerstone” and a testimony “that big thinking can pay off in Cleveland.” Can these people read?

what is the city blowing off in taxes? Michelle Jarboe said the Wolsteins agreed to pay like $600K a year to the cleveland schools (50% projected)

"...In response to Dweller1's question about taxes, no, I don't know what the total city taxes would be from this project. I do know that under the original tax-increment financing agreement between the city, the schools and the developers, the school district was slated to get 50 percent of the additional property taxes created by the project. That number -- the district's 50 percent share -- was projected to be about $600,000 annually."

The TIF is the agreement with Cleveland schools that I mentioned in the story. For those who don't know, TIF stands for tax increment financing. Such agreements capture part of the increased property tax collections created by development and use those payments to cover the costs of portions of the development. The schools don't bring in less money under a TIF - but they also don't get additional property tax revenues to which they otherwise would be entitled.

Under a TIF agreement reached in 2005, the schools would have received 50 percent of the additional property tax revenues created by the project. That 50-percent share was estimated to be about $600,000 a year.

With the emphasis on commercial development in phase one of the revised project, the anticipated property tax revenues actually jump, even though a smaller piece of property is being developed. My understanding is that the schools' 50-percent share would be roughly $1.4 million annually. Members of the Flats East Bank team have told me that the schools would get 100 percent of the increases in property taxes from any commercial development in the second phase of the project, whenever that occurs.

The school board discussed the TIF and the related compensation agreement last night. The details aren't set in stone yet, but rest assured that we'll be writing more about the agreement as it evolves.

So...the Wolstein's get the property and will pay the schools 600K regardless if they keep building beyond this? If this empty lawn in the rendering is decided to become another building. The schools get nothing beyond $600K?

They get 50 percent. That means that they give up 50 percent. So they lose half of the income the schools should be getting. Is that considered fair? Why does the school board go along with this kind of deal? Do they have any consideration for the students of the Cleveland schools?

This is a no-win policy for the Cleveland schools and it continues to take funds from the most needy.

Property taxes are exempt for the Browns stadium, the Progressive Field and the Q Arena. Noned pay a penny of property taxes, thus depriving the Cleveland schools totally of property tax income from these facilities, all owned by multi millionaires. TIFs deprive the schools of more income they should be getting. These are already primarily tax subsidized facilities and then they don't pay any taxes! You build them, then don't tax them! Add the Wolstein projects - as it happened with the Ritz-Carlton, the Marriott, the Key Center (all tax abated for 20 years).

Further, these - as with the Wolstein project - non-tax paying sports facilities are all located in Cleveland but serve the larger community. The larger community pays nothing or little for them while enjoying - at times - nearly the full benefit. It isn't poor people who are filling up the Q for billionaire Dan Gilbert, nor the Browns stadium, owned by the billionaire Lerner family.

Clevelanders - least able to pay - are typically paying the full price.

If there is any regionalism or county reform, start with sharing the burden of these continued demands by the wealthy in town.

What is surely inexplicable is why the Mayor and City Council go along with this kind of inequity. This is criminal.

Yes, dweller1, I saw what Roldo wrote, as well as your comments on his site. It's an interesting discussion.

But I'm not going jump into a debate over whether TIFs are good development tools or bad development tools. My job is to report on developments and the various tools being used to finance them, so that people like yourself, Roldo and other people reading the paper and this site can come up with their own, informed opinions about a deal.

If you are following this story, you must visit Cleveland.com for a video by the writer of this article, discussing the project with some public relations spokeswoman for the developer... or is that another Plan Dealer employee... so hard to tell one from the other:

The most interesting arguement Michelle makes for Wolstein is that if Wolstein doesn't get our money for this Ernst and Young may move their employees. She doesn't analyze the fact they are moving their employees from downtown to this tax abated mess... what could be worse, moving out east with Eaton... to Chicago... who really cares?

Michelle gives a gift-list of taxpayer giveaways to this family for destroying our historic heritage and it is in the $10s millions.

That's one way to bail-out the crumbling Wolstein dynasty... shopping malls are so 1990s... let's have these geniuses ruin the cities now

Cleveland planners and leaders who have supported and allowed this demo of our waterfront, and raping of taxpayers, will go down in history as great cowards and failures... as the entire community suffers for their incompetence, like usual.